Syllabus- GS-III & V: Infrastructure & Energy

Why in the news?

The State of Assam is experiencing a pressing gap between power demand and supply, even as it embarks on a transition towards renewables and greater self-reliance. At the same time, the State appears to be falling behind its peers in securing long-term hydropower allocations, especially from nearby projects in neighboring State Arunachal Pradesh. The story therefore raises questions about energy security, opportunity cost and sustainable growth for Assam.

Current demand-supply situation

• In 2024-25, Assam’s peak power demand reached about 2,879 MW and the energy requirement was roughly 13,680 million units (MU). 
  • However, supply fell short by around 195 MW or 260 MU.
• The State’s in-house generation by Assam Power Generation Corporation Limited (APGCL) is constrained: although the installed capacity stands at about 529.86 MW, the effective capacity is lower (approximately 391.36 MW) because of ageing infrastructure.
• Key plants are under-performing: for example, the Namrup Thermal Power Station (119.5 MW nominal) is reportedly producing only ~26 MW.
• Since internal generation is limited, Assam depends heavily on allocations and power purchases from Central utilities and power exchanges.
  

Hydropower allocation and untapped potential

• Assam was originally allocated 208 MW from the Subansiri Lower Hydroelectric Project via a 40-year Power Purchase Agreement (PPA). 
  • That share has increased to 533 MW (including an extra 25 MW of “free” power attributed to local anti-dam movements).
• However, a PPA for an additional ~300 MW from the project remains unsigned. Also, the Central Government has allocated 200 MW from the Kalai‑II Hydroelectric Project in Arunachal Pradesh, yet no PPA is in place.
• Meanwhile, other States (e.g., Uttar Pradesh, Bihar, Tripura, Tamil Nadu) are actively securing long-term hydropower PPAs from upcoming Arunachal projects, while Assam appears to lack similar urgency or follow-through.
  

Renewables, diversification & the roadmap

• The State has begun to expand its solar procurement: for example, a 90 MW solar project by Azure Power (across four districts) supplies power to Assam Power Distribution Company Limited (APDCL) at Rs 3.34 per kWh under a 25-year deal.
  
• APDCL has also secured ~179 MW from eight private solar plants (in Sonitpur, Sivasagar, etc.). The aim: diversify away from fossil fuel / central PPA dependence.
• According to the Central Electricity Authority (CEA) Resource Adequacy Plan (2024-25 to 2034-35), Assam’s demand is expected to grow at ~6.86 % CAGR. By 2034-35 a shortfall of ~3,519 MU (≈13.43 % of annual needs) is anticipated unless capacity is augmented.
• The plan sets targets for the energy mix: move toward ~51 % renewable share (by end of plan), adding e.g., 2,250 MW solar, 450 MW wind, 915 MW storage, etc. 
• Meanwhile, thermal (coal) plants will also run at ~53-62 % plant load factor to support this transition.
  

Policy / Framework context

• The State has launched the Assam Thermal Power Generation Project Promotion Policy, 2025: offers free land/water/roads, up to 27 % government equity, guaranteed purchase of power, and options to export surplus power. 
  • A flagship project: a 3,400 MW coal-fired plant in Dhubri district.
• Renewable Purchase Obligation (RPO): Assam’s RPO targets rising from nearly 30% in 2024-25 to over 43% by 2029-30 to boost renewable energy procurement.
• Assam Integrated Clean Energy Policy 2025: Aims to promote renewable energy projects totaling around 11,700 MW by 2030, including solar, wind, small hydro, battery storage, and green hydrogen, making Assam an investment destination for clean energy.
• The hydropower allocations and PPAs fall under the broader Central-state arrangements governed by the Electricity Act 2003, Central Electricity Authority norms and inter-State PPA frameworks.
• The move toward increased renewables & storage aligns with the Central Government’s guidelines on resource adequacy (Ministry of Power, 2022) and the national target of achieving net-zero by 2070.
  

Key challenges and implications

• Under-utilised hydropower potential: Assam’s delay in finalising PPAs for hydropower allocations means lost opportunity, especially when neighbouring States are securing long-term deals.
• Ageing generation infrastructure: Internal generation is limited, and plants require refurbishment / upgradation. This raises concerns about reliability and cost.
• Land & resource constraints for renewables: In a State with high population density and land-use pressures, solar/wind/storage deployment faces practical hurdles.
• Dependence on external supplies: Heavy reliance on Central PPAs and power-exchange purchases limits autonomy and may expose Assam to price / supply risk.
• Transition timing and mix: Managing the shift from fossil/central supply toward renewables + storage, ensuring reserve margins during peak seasons, while maintaining affordability.
• Policy execution & investment climate: Even with policies in place, timely execution, investor confidence and infrastructure readiness (grid, transmission) remain critical.
  

Why this matters for Assam & India

For Assam, securing reliable and affordable electricity is fundamental to supporting industrial growth, upgrading rural electrification, boosting agriculture/irrigation and improving consumer services. At a national level, Assam’s transition toward renewables, and tap into the hydropower potential of the Brahmaputra basin, contributes to India’s larger energy-security and climate-goals.

Exam Hook: Key Take-aways

• Energy demand in Assam is rising rapidly (~6.9 % CAGR) but supply and infrastructure are lagging.
  
• Hydropower allocations exist (e.g., from Subansiri Lower, Kalai-II) but formal PPAs remain unsigned — indicating a missed strategic window.
  
• Diversification toward solar, wind and storage is underway but practical constraints (land, grid, investment) persist.
  
• Policy tools like the Assam Thermal Power Generation Promotion Policy 2025 show the State’s intent—but execution will be key.
  
• The story underscores the interplay of state-level planning, central allocations, inter-state dependencies and the need for a balanced energy-mix for growth.
  

Important Terms Explained

• Power Purchase Agreement (PPA): A contract between power producers and buyers outlining terms for electricity supply.
• Renewable Purchase Obligation (RPO): A mandate for electricity distributors to purchase a fixed minimum share of power from renewable sources.
• Installed vs Effective Capacity: Installed capacity is the maximum possible output; effective capacity considers real operational performance.
• Thermal Power Plant: Generates electricity using heat from coal, gas, or other fuels.
• Hydropower: Producing power from flowing water, a renewable and long-lasting energy source.
• Solar Power Procurement: Acquisition of power generated from solar energy, often through long-term contracts.

Mains Question:
Discuss the challenges and strategies in Assam’s shifting energy landscape towards renewable sources while balancing thermal power demands. How can Assam ensure energy security amid rising demand?

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